Special Charitable Giving Deduction in 2020

December 14, 2020

The holiday season is often a time of giving, not only to our loved ones, but also to our favorite charities. With many charities and non-profit organizations currently working above and beyond their normal capacities to help those struggling with job loss and personal loss during the pandemic, charitable giving is especially important this year.

That is why the CARES Act legislation, passed in March of this year, included changes for the year 2020 to encourage people to make charitable contributions. For the 2020 tax year, taxpayers are allowed to reduce adjusted gross income (AGI) by $300 worth of charitable contributions made in 2020. This means if you made at least $300 of charitable donations in 2020, you can claim an above-the-line deduction of up to $300, even if you do not itemize deductions.

If you are a more prolific charitable giver, the CARES Act also lifted the 60% AGI limit for charitable contributions for 2020. This means that you are allowed to itemize charitable contributions up to the full amount of your AGI for 2020, and any additional charitable contributions can be carried over to be applied to AGI in a later year. 

The CARES Act legislation includes contributions that are given to qualifying organizations, which include religious organizations, public charities and certain private foundations, but not donor-advised funds, supporting organizations, and private grant-making organizations.

Please give our office a call if you have any questions, or you may want to reach out to your CPA with questions. Happy giving!